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Distorting the Snallygaster Market

April 28, 2016 , ,

If you’ve been paying any attention at all to the FCC’s recent privacy rulemaking, you’ve probably heard its opponents claim that any regulation (no matter how minor, apparently) will create “distortions in the market” that would put broadband internet service providers (or BIASes) at a disadvantage. What market is that, you ask? Yeah, we’re not sure either.

Much of the “market distortion” angle seems to come from one of two different places. First, commentators who advance the distortion argument want to treat the entire internet ecosystem as one massive, unified market, in which any player–no matter their role, apparently–can be substituted for another. A BIAS is no different, they say, from Google or Facebook or Netflix or any other number of edge providers or services. The end result is a market cryptid, a mythical beast akin (both figuratively and geographically) to DC’s fabled Snallygaster. And while the vaunted snallygaster sported the head of a lizard, wings of a bird, and tentacles of an octopus, the Internet Eco-Monster appears to have the body of an Internet Service Provider, the head of an advertising company, the arms of a search engine, and the legal rights of an individual. And while we here at Public Knowledge have debunked this myth elsewhere, it bears repeating: BIASes are unique. They are gatekeepers. Whatever other business a BIAS wants to enter, if it provides broadband internet access, it’s a BIAS, and its BIAS-ing is subject to the same laws and regulations as its peers in that realm.

“But Facebook and Google!” they cry. “They have even more data than the ISPs do!” That may be true, and frankly, the data collection practices of edge providers is something worth addressing (preferably at the Federal Trade Commission, which has clear jurisdictional authority over edge providers). But businesses are not entitled to apply the least common regulatory denominator across all of their various arms. Advertising placement is not the same as providing broadband service; broadband service provision is not the same as advertising. Opponents of meaningful privacy protections often rely on this false equivalency, claiming that because BIASes choose to make money off advertising, their core service–BIAS service–should be unburdened by regulation. It’s the business equivalent of forum-shopping, picking and choosing angles of vertical integration in hopes of finding the least burdensome regulatory field, and then claiming that that field applies to all of your other ventures as well.

The second source of the “market distortion” argument comes from the idea that a BIAS, if banned from leveraging its dominant position in internet access provision, would be unfairly edged out of the advertising markets vis-a-vis Google, Facebook, AOL, and the like. Again, this relies on the idea that companies are not only able, but entitled to abuse their market power in search of vertical dominance in other markets–an idea that the FCC (not to mention the courts, and Congress) have flatly rejected in previous CPNI privacy proceedings. Lest we forget, part of the impetus behind the creation of privacy rules in 1996 was AT&T’s abuse of its market power to squeeze competition in a separate market–home alarm systems.

With the privacy proceeding just gearing up, you can expect a never-ending string of sightings of this mysterious internet Eco-Monster, serving as the mascot for many, tormented by a lifetime of constant distortion.

Image credit: Wikimedia Commons